How the U.S. economy can look pretty good but feel pretty bad
9 hours ago
- Inflation remains above the Fed's 2% target after five and a half years, straining households despite easing from its peak.
- Wage growth is losing ground against inflation, with average hourly earnings failing to keep pace with price increases.
- The unemployment rate is relatively low at 4.1%, but hiring and labor force participation are weak, signaling a less robust job market.
- Consumer spending remains strong, driven by higher-income households and credit use, but retail sales fell in July for the first time in nine months.
- Consumer confidence has declined due to cost-of-living worries and geopolitical tensions, though this has not yet led to broad spending cuts.
- AI-related investment is surging, boosting productivity and factory output, but its overall economic impact is still small and uncertain.
- Economic growth slowed in the most recent quarter, partly due to a widening trade deficit offsetting strong consumer spending.